How to Break into Private Equity from Investment Banking

How to Break into Private Equity from Investment Banking

For most investment bankers, private equity is the next goal. Here’s everything you need to know about breaking into private equity.

Some finance graduates are fortunate to start working in private equity, others pursue a career in investment banking and eventually move to PE. After 2-3 years of working at an investment bank, private equity sounds like the ideal option. For most investment bankers and analysts, it is the next goal. But breaking into private equity comes with its own set of challenges and ramifications.

So how can you easily trudge this path?

First things first, build your repo with the managing director.

When you break into private equity your MD will play an important part. While other analysts crib about long working hours and too much work, you will need to keep mum and continue to work as required. Everywhere investment banking analysts are expected to work long hours, there’s no escaping from it. However, cribbing about it all the time will make your managing director understand your unwillingness to work and lack of maturity about the workplace.

A career in private equity starts with your interviewing firm checking your reputation at the bank you worked for. Even a lukewarm response from the MD will get you out of the door easily.

In simple words, maintain a positive attitude throughout your work at the bank.

Maintain high-quality work

Unlike other industries where you can get away with substandard work, work at an investment bank is taken extremely seriously and accountability is held to an extremely large extent. You will be solely responsible for your work. This means double-checks your work and avoids callous attitudes like spelling errors and formatting while creating your reports. Senior Analysts will remind you this time and again, if they don’t they are doing you a disservice.

Do you work diligently

It’s easy to forget what you are doing and why you are doing. For analysts, it is even easier. So it’s important that you remember what you are doing. When it’s time to interview at a PE firm, most analysts are left thinking about their experience at past deals even though they have spent 100 hours working on one deal. So it’s important that you understand what you are doing and why you are doing it.

Accretion and dilution analysis is a major part of the responsibilities of analysts. While most analysts rely on templates, it’s important that you understand everything you are doing. You are not merely expected to perform analysis, so take the time to understand and interpret analysis as well.

For instance, if analysis reveals accretion after a year, what is the reason behind it? Is it a large amount of cash required to fund the acquisition or something else? This will make you a better analyst and separate you from your peers. At some interviews, you will also be expected to build models. Some firms may send you financials in advance and expect you to send models before appearing for an interview, others may require you to build a model onsite.

Final word

In the end, securing a job at PE will depend on your skills, your relationship with your previous employer, and other factors like GPA will matter less. Among a group of peers, it is mostly one guy in which a firm picks up overall.

Private equity professionals are expected to be diligent and careful in their approach to work, after all, it’s a matter of large capital.

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